Central banks are expected to buy fewer gold bars than previously expected
this year after the price plunged in April, according to the World Gold
Council.

Central banks are now expected to be net buyers of 300 to 350 tonnes of gold in 2013, down from an earlier forecast of 400 to 450 tonnes.

Marcus Grubb, the WGC’s managing director for investment, told the Daily Telegraph that the likely explanation was that policy makers were concerned about further falls in the price of bullion.

“This was the tenth consecutive quarter of central bank buying, but it was disappointing as it was at the lower end of our expectations,” Mr Grubb said. However, he argued that central banks in emerging markets still wanted to increase their holdings.

In the second quarter, gold purchases by central banks were concentrated among the former Soviet states, with Russia making the largest purchase. The Central Bank of Russia increased its holding by 15 tonnes in the three months to June, bringing its total purchases in the year to date to almost 39 tonnes.

“Germany’s small sale in June of less than 1 tonne was the latest in a series of sales to the finance ministry for the purpose of minting coins,” the WGC noted.

These figures may not be complete, however, as China rarely updates the market on its holdings of bullion. “The last announcement by the People’s Bank of China was in 2009, when it said its holding of gold had increased from 600 tonnes to 1,054 tonnes over the previous six years,” Mr Grubb noted. This is believed to be about 1.8pc of the country’s total foreign exchange reserves.